Intel may be looking to Verizon to take over its TV business

Intel has talked to Verizon about partnering or even taking over its Oncue TV project, which was scheduled to debut before the end of the year but now seems to miss that deadline due to an inability to secure necessary licenses from TV networks.

AllThingsD reported Wednesday that the two companies are “in advanced negotiations,” while Variety stated that Verizon and Intel are “not close to clinching a deal.” We’ve also heard that these discussions have happened, but that there are no deals in place yet, with options on the table including a partnership, a complete sale or even a partial sale, with Intel retaining a minority stake in the unit.

Intel had publicly announced in February that it was getting into the pay TV game. The company wants to offer TV subscription bundles over the internet, streamed to a set-top box manufactured by Intel as well as to mobile devices. Intel wants to get consumers to switch to its service by offering them more custom-sized bundles as well as a better user interface and a catch-up service that is modeled after the BBC’s iPlayer, offering the ability to go back and watch any show that has aired within the last few days.

Oncue has been tested by a few thousand Intel employees in three cities, but efforts to get the necessary licenses to launch the service have proven challenging. The company is facing three key issues: As a newcomer, it has to pay more for retransmission rights that any of the established big players, which could make Oncue too expensive, and thus unappealing for people tired of paying for cable. Competitors have also started to pressure networks to not license to Oncue, and acquiring the rights for its catch-up service has proven to be challenging as well.

However, the bigger question at hand may be whether Intel still sees long-term value in the TV business. Oncue was championed by Intel’s former CEO Paul Otellini, who stepped down in May. Otellini saw Oncue as a chance for Intel to extend beyond chipsets and essentially become a consumer services company. He gave the unit in charge of the project, dubbed Intel Media, a lot of autonomy, to the point where most hires came from the outside and few people within Intel even knew about the project.

His successor Brian Krzanich is seen as a lot more skeptical of Oncue’s prospects. Still, Intel has made significant investments in this space, including a number of talent acquisitions. This could actually make the company an interesting acquisition target for Verizon, which may be looking to acquire technology and expertise to offer TV services beyond its own FIOS footprint. Verizon already has carriage agreements for FIOS TV, but would have to negotiate new agreements if it was to launch to get Oncue up and running as a nationwide offering.